The indirect cost to the economy equals more than $8,000 per household per year!

How could ObamaCare subsidies be changed to avoid this heavy burden on the economy as a whole? By giving everyone the same tax credit regardless of their income and getting rid of the employer mandate at the same time. That would eliminate all of the anti-work incentives in Obamacare, while retaining the fixed dollar credit with its very good incentive effects.

I would set the credit at $2,500 for an individual and $8,000 for a family of four – the Congressional Budget Office estimate of the cost of enrolling people in Medicaid. I would then give everyone the opportunity to use their credit to buy into Medicaid (and give everyone in Medicaid the opportunity to get out).

Let’s recap. By replacing the current subsidies with a simple, fixed dollar subsidy universally available to everyone one we would (1) eliminate all the perverse incentive to over-insure, (2) eliminate all of the perverse incentives not to hire and not to work, and (3) come about as close to universal coverage as we are ever going to get.